US port talks to resume as $2-billion-a-day threat looms

Labor negotiations at 29 ports along the U.S. West Coast will resume next week to head off a strike or lockout that could cost the U.S. economy more than $2 billion a day. Both sides describe talks as “productive.”

Negotiators for the International Longshore and Warehouse Union and management’s Pacific Maritime Association are set to meet again Aug. 4 after discussions were paused July 25 for unrelated contract talks in the Pacific Northwest, the union and the Association said in a statement.

The ports from San Diego to Bellingham, Wash., which contribute 12.5 percent to the U.S. gross domestic product, have remained open, and about 20,000 dockworkers have continued loading and unloading cargo since their contract expired July 1. The union and the maritime association are negotiating over work rules, salaries and health care.

“They see the wisdom of reaching an accord on both sides without any disruption,” said Jock O’Connell, an international trade economist in Sacramento. “They know this is the worst possible time to obstruct movement of goods through seaports because this is when most of the importers are bringing in merchandise for the back-to-school season and the end-of-the- year holidays.”

Asia imports

Discussions that ended July 25 “after several days of productive contract talks” will resume in San Francisco, according to the statement.

The maritime association, which represents shipping lines and terminal operators, locked out workers in 2002 after contract talks broke down. The 10-day shutdown ended when then-President George W. Bush invoked the rarely used Taft-Hartley Act to reopen the ports. The cost of that interruption was $1 billion a day, according to the maritime association.

Another stoppage that long would put 169,000 people out of work, cost $7.1 billion in lost imports and exports and sap $2.1 billion a day from the U.S. economy, according to a report in June from the National Retail Federation and the National Association of Manufacturers.

“Everybody still remembers what happened in ’02,” said Jonathan Gold, vice president of supply chain and customs policy at the retail federation in Washington. “That’s playing a pretty heavy role as importers and exporters are planning out their supply chains and trying to get their goods to markets when they need to be there.”

Contingency plans

While it’s a positive sign that the union and the association have issued joint statements announcing progress in the talks and pledging to keep cargo flowing, Gold said, some companies have put in place contingency plans such as relying ports in Canada or shipping merchandise earlier.

“Everybody is planning for that what-if scenario,” he said.

The West Coast ports are responsible for almost half of all U.S. maritime trade, including more than 70 percent of imports from Asia. The largest of the ports is the Port of Los Angeles, where cargo volume has rebounded to almost the peak in 2006, before the recession, and could surpass that next year, based on port statistics.

West Coast ports have been squeezed by competitors in Mexico, Canada and the Gulf Coast and East Coast in the U.S., and will be pressured by the opening of the expanded Panama Canal in 2015. The West Coast ports’ share of U.S. shipping trade volume fell to 43.5 percent in 2013 from 48.6 percent in 2008, according to a maritime association report.